Total cost minimization - Essay Example

The new communication and information technologies today have made it possible to attain sophisticated and continuous process manufacturing. The automotive industry, for instance, has seen dramatic breakthroughs in technology displacement and reengineering. They now make over fifty million new automotives every year and are responsible for the creation of one out of every twelve jobs in the North American manufacturing industry. Experts predict that Japanese owned factories, by the end of this decade, would have the ability to make an automobile in eight hours or less (Dikbas and Scherer 297).

This shorter time of production will result in fewer workers being needed for the production line. Japan’s nine automakers make over twelve million vehicles each year using less than six hundred thousand workers. Automakers in Detroit employ over two and a half million workers in the production of the same number of cars. US automakers, following Japan’s lead, have started to reengineer their operations in the hope that they can increase their productivity, improve product share, reduce labor rolls, and increase their profit margin.

GM, in 1993, announced plans for the implementation of changes in practices of production that aimed to eliminate as many as ninety thousand jobs by the late 90s (Dikbas and Scherer 298). These came on top of the quarter million jobs that they had already done away with in 1978. Other global automotive makers have also reengineered operations to eliminate thousands of employees with German automakers eliminating one in every seven jobs by 1995. The new “smart robot” generation that is armed with increased flexibility and intelligence has become a mainstay in the market, as factory owner are less likely to substitute them for laborers since they are cost-effective.

Each robot replaces four jobs in the global economy and pays itself off in one year if used twenty-four hours every day. The world’s robot population was estimated at about 630,000 in 1991, and the number had grown by 3.5 times in 2008 as the machines have become more flexible, versatile, and intelligent (Meiksins et al 202). The steel industry has also had fortunes that closely mirror those of the automotive industry and have led to sweeping changes in production and organization, in the industry.

The US was the world leader in production of steel in the 80s. However, this competitive edge has undergone serious erosion because of failure by companies in the US to keep in step with steel manufacturers in Japan that have made the production of steel a highly continuous and automated operation. This has led to Nippon Steel reducing its production hours to one hour from twelve days (Meiksins et al 203). Increased steel production automation has reduced the amount of labor required in North America.

US Steel, the largest steel company in the US, in 1980, employed over 120,000 workers, which decreased to 20,000 in 1990 and 14,000, in 2005, even though it was producing the same output (National Academy of Engineering 10). These numbers are predicted to drop even further in the coming ten to twenty years as more advanced operations become available in the process of manufacturing in these factories. The highly automated methods of manufacturing have been used in combination with radical management hierarchy